BizTalk: Shaping up to cut cost
I haven’t covered the Mindanao Shippers’ Conference in June but in the sidelines I heard one of the organizers talk about the high cost of freight as among the bigger concerns there.
I was reminded of this when I interviewed Maritine Industry Authority officer in charge Virgillio Armonia last week.
He said small shippers should pool their cargo to minimize freight cost as shipping lines charge by container van.
Armonia stressed that the practice for now is costly because most of the shippers are not organized, as this report on MindaNews.com presents.
What’s the significance of this? The small shippers referred to are mostly growers and marketers of fruits and vegetableproducts. Many of them consolidate ouput from small to medium scale farmers in countryside communities.
If freight cost is pulled down, that should mean lower total cost and more price-attractive products in the markets targetted. Lower price, holding all other factors such as assuming quality is the same etc. constant– should mean higher demand.
Simple economics would say higher demand welcomes higher production. It should mean more livelihood, assuming the producers have the capacity to respond appropriately to the elastic demand.
So even if cost is a factor, I believe it still boils down to capacity (capital, technology, market access, outlook and economies of scale, among others).
Freight cost, however, is a crucial input to cut down cost because for highly perishable goods such as fruits and vegetable — time is serious element even with the cold chain.